The May U.S. Jobs Report Is a Slam Dunk
- Today’s national employment report from the U.S. Bureau of Labor Statistics offered further confirmation of the U.S. economy’s strength, reporting an increase of 223,000 jobs in May. Job gains have averaged 202,000 per month in 2018. The current economic cycle is the longest continuous expansion on record, with 92 straight months of job additions.
- The national unemployment rate fell to 3.8 percent, similar to April 2000 and the lowest recorded since 1969. The unemployment rate for women also dropped to lowest since 1953 and continues to trend lower for other demographics.
- A strong point in the report was the increase in hourly wages, up 2.7 percent from a year ago to $26.92. In addition, wages of nonsupervisory workers have increased at a faster rate than wages overall for the first time since 2014.
- According to the Beige Book released earlier this week: “Labor market conditions remained tight across the country, and contacts continued to report difficulty filling positions across skill levels. Shortages of qualified workers were reported in various specialized trades and occupations, including truck drivers, sales personnel, carpenters, electricians, painters, and information technology professionals. Many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages. In the aggregate, however, wage increases remained modest in most Districts. Contacts in some Districts expected similar employment and wage gains in the coming months.“
- In explaining why wage growth has lagged during this expansion, economists note that millennials, who are replacing retiring baby boomers, generally make smaller starting salaries than the retiring boomers have now. Also, worker quits, which is often viewed as a sign of employee confidence in the labor market, has not been as high as in previous expansion periods, potentially due to baby boomers staying longer in the labor market. However, job switching has picked up in recent months, and they are also a source of upward pressure on wages, since workers generally receive more money in their new jobs.
- In the Bureau of Labor Statistics Job Openings and Labor Turnover Survey released in May, open positions shot to a new high in March. There were 6.6 million open jobs, suggesting that there is much more room for the labor market to grow.
- While May job growth was broad across industries, the biggest gains were in the health care sector, up by 31,700 jobs; followed by retail, up by 31,100 jobs; professional and business services, up by 31,000 jobs; construction, up by 25,000 jobs; and leisure and hospitality, up by 21,000 jobs. The weakest gains were in temporary help services, motor vehicles and parts, and utilities.
- According to a CompTIA report released today, the information technology sector added an estimated 8,700 new jobs in May, the fourth consecutive month of employment growth. The largest gains were in IT services, custom software development and computer system design, up by 6,600 jobs; computer, electronics, and semiconductor manufacturing, up by 2,200 jobs; and other information services, including search portals, up by 2,200 jobs. There were 314,000 openings for IT occupations in May, up by a notable 80,930 jobs over April for one of the largest month-over-month increases in recent years. Almost one-third of openings were for software and application developers.
Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.
(Promotional photo: iStock/B&M Noskowski)